With Its Payments Network for Landlords and Tenants, JPMorgan Chase Seeks to Disrupt the Rent Check

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Last Updated on November 1, 2022 by Bitfinsider

JPMorgan Chase wagers that landlords and tenants are prepared to abandon paper checks and adopt digital payments.

According to Sam Yen, chief innovation officer of JPMorgan’s commercial banking division, the bank is piloting a platform it developed for property owners and managers that automates the billing and acceptance of online rent payments.

While digital payments have steadily taken over more of the world’s transactions in recent years, as a result of the Covid epidemic, the monthly rent check still reigns supreme. This is due to the fact that the market is highly fragmented, with the majority of the nation’s 12 million property owners operating tiny portfolios of fewer than 100 units.

According to JPMorgan, as a result, approximately 78% of employees continue to be paid through checks and money orders. More than 100 million Americans together pay $500 billion annually in rent, according to the bank.

In a recent interview, Yen stated, “The great majority of rental payments are still made by check.” “If you speak with folks nowadays, they will frequently say, ‘The only reason I still have a checkbook is to pay my rent.'” Therefore, there are numerous opportunities to create efficiencies.”

JPMorgan has spent the previous few years developing the Story program, which is intended to become an all-inclusive property management system.

According to Kurt Stuart, who oversees JPMorgan’s commercial term financing in the Northeast region, rent collecting is the “most time-intensive process that exists today for a real estate owner-operator.” Therefore, the bank’s initial goal was to streamline this procedure.

In addition to needing to physically collect and deposit paper checks, landlords generally rely on decades-old software such as Microsoft Excel and Intuit QuickBooks, according to Yen. In recent years, technologies such as Buildium and TurboTenant that are more suited to the real estate sector have emerged. None are currently dominating, per the executive.

Story will “provide [property owners and managers] far greater visibility across their entire portfolio to know precisely what’s been paid and what hasn’t been paid,” according to Yen.

According to Yen, JPMorgan intends to gain traction by providing customers with beneficial insights through data and analytics, such as how to determine rent levels, where to make future investments, and even how to screen renters.

Despite claiming to be the nation’s largest lender to multifamily property owners with $95.2 billion in loans outstanding at midyear, the bank is seeking to expand beyond its 33,000 current clients.

Yen stated that landlords and tenants do not need to be JPMorgan customers to join up for the platform when it is introduced to the public next year. He stated that the bank has not yet finalized its pricing structure for the product.

Through an online dashboard, residents can automate their monthly rent payments, receive reminders, and examine their payment history and lease agreement. This is more convenient than mailing a paper cheque, according to Yen.

It is part of JPMorgan’s bigger effort to develop digital experiences, combat fintech competitors, and strengthen client relationships. Under the leadership of CEO Jamie Dimon, the bank has pledged to spending more than $12 billion year on technology, a stunning sum that has aroused worries among bank experts who have demanded greater transparency over expenditures this year.

Doug Petno, CEO of JPMorgan’s commercial banking division, told analysts in May that the bank aspires to collect a “substantial share” of the $500 billion in yearly rent payments using its software.

Petno stated, “We’ve made investments to provide comprehensive payment and rent solutions capabilities for our multifamily clients.” “By taking this action, we intend to generate an entirely new and significant revenue opportunity for our company.”

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